House proposes phasing out Vernon tax break

VERNON -- A property-tax break benefiting town residents would continue but would be phased out over a period of three years, according to the latest proposal in the state Legislature.

Due to the presence of the Vermont Yankee nuclear plant, Vernon residents get a 25 percent reduction in the statewide education property tax. With the plant's pending closure jeopardizing that benefit, Rep. Mike Hebert had proposed extending the tax break for a significant time period.

Hebert's proposal is advancing, but it has been changed: The tax break would stay at 25 percent for 2015 and then would decrease incrementally until 2018, when Vernon residents would be paying the same rate as other Vermont property owners.

It's not what Hebert, R-Vernon, initially had asked for. But he calls the plan a "softened landing" that is better than the tax break disappearing suddenly.

"It's significantly better than falling off that cliff," he said.

The tax benefit dates to the late 1990s. Originally, Vernon property owners paid just 50 percent of the state's tax rate, but that has risen to 75 percent over the years. Officials have said the break is due to the fact that Vermont Yankee pays a state electric-generating tax.

Looking for ways to help cushion the blow of Yankee's shutdown, which is due by year's end, Hebert in early February introduced a bill that would have extended the tax break for the near future.

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The legislation had said Vernon "shall continue to be treated as if its grand list included an operating electric-generating plant ... until the property in Vernon currently composing an electric-generating plant ... has been decommissioned and repurposed for another use."

Later in February, Hebert testified for the bill before the House Ways and Means Committee along with Vernon Selectboard Chairwoman Patty O'Donnell and Jim Kane, business administrator for Windham Southeast Supervisory Union. At that time, Hebert said he was asking for extension of the 75 percent rate for a decade.

The Vernon tax-break extension eventually was folded into the state education tax bill. Hebert said that happened after he discussed the matter with House Speaker Shap Smith, who said the Vernon bill stood a better chance of advancement within the context of a larger piece of statewide legislation.

"I took his suggestion and went that route," Hebert said.

On April 4, the House approved the education-tax bill. Included in it are provisions for Vernon residents' education-tax rate to continue at 75 percent of the state rate in 2015, then rise to 83 percent in 2016, 91 percent in 2017 and 100 percent in 2018.

Hebert said his initial request to extend the tax break indefinitely "was really a conversation-starter." Asked for comment on the changes that have been made in the House, he took a philosophical view.

"The ‘cliff' has been eliminated which would have immediately increased the tax rate in Vernon by at least 38 cents when generation ceases at the plant," Hebert said.

"Certainly, I appreciate what they've done," Hebert added. "It helps the town of Vernon."

The education-tax bill now is in the state Senate, and Hebert pledged to "work with the members in the Senate to try to further soften the impacts of the plant closure on Vernon's tax rate." He noted that Windham County Sen. Peter Galbraith supports the Vernon proposal and spoke in favor of it last month at Vernon Town Meeting.

Galbraith, a Townshend-based Democrat, said the bill is in the Senate Finance Committee, of which he is a member.

"We went through the bill on Wednesday, and there was general understanding of Vernon's special circumstances," Galbraith said. "I am optimistic that we will be able to get this provision through the committee and the Senate."

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